Russ Ford's Blog

Giving Thanks For A Job- For Any Job

This is the weekend for  giving  thanks for all of the good things in our life.  My daughter for example, should be giving thanks for having a job.

After graduating from university she went through a period of unemployment which ended when she got a job in a sandwich shop/bakery. She is earning just above minimum wage and has no benefits.

Why  should she be so thankful for that.  She should be  because she has a job and many who have also graduated from university do not.  She should be  because she is earning above minimum wage  and most  are not.  A recent report from the Wellesley Institute  found  that 9.0% of the  workforce is just earning  minimum wage.  That compares  to 4.3% in 2003.

There is another youth who works part time at LAMP. He graduated the same year  and aside from short term work at LAMP has not been able to find a job.  He is Black and while my daughter is facing a youth unemployment rate of 14%,  it is at 28% for Black youth.

We are creating a lost generation  who leave post secondary education with a huge debt load and then cannot find employment .  And we wonder why gang activity is on the rise. We wonder why youth are dropping out of school and society.  When you limit options,  people find their own.

 In ten years when we have a glut of educated workers still earning  minimum wage or in some cases still trying to find permanent employment , we could face an economic  crisis. They won't be buying homes or cars.  They will not be contributing to the economic well being of our society because they have been excluded from participating in it.

So what is the solution? There seem to be two dominant theories. We are well aware of one of them, it is the austerity agenda which our governments are currently following. 

The austerity agenda is characterized by promoting a positive investment climate by reducing government involvement in the economy; cutting corporate taxes and in some jurisdictions in the United States  eliminating or restricting  trade unions.
Those that support this agenda say such a climate will result in greater corporate profits which in turn will result in greater  corporate investments  and that will create jobs.

So that's the theory, but  we can easily judge for ourselves if it is working.  In the United States for example  (and I assume here as well) corporate profit margins have never been higher,  yet the amount spent on wages as a percent of the American GDP has never been lower.

The problem is that while corporations are benefitting from this agenda we have no control over how they reinvest their money.  Many are simply not reinvesting which former Bank Of Canada Governor Mark Carney referred to as "dead money". Others may be investing but there are no restrictions as to where in the world they choose to reinvest.

In the United States 24 states have enacted "Right to Work " legislation. For those  unfamiliar, right to work legislation means that a worker who is employed in a unionized workplace no longer has to pay union dues.  If however, the union negotiates a wage increase, the employee who decided not to pay his dues gets the wage increase  just like those who have continued to pay.

It is sort of like telling you that paying taxes is now optional but don't worry if you get sick the hospitals will still  serve you.  If your street  has a big snowfall,  don`t worry it will be ploughed or if you get robbed, the police will still  help you even though you have decided to pay nothing for this service.

 Please recognize there are many factors that determine  the state of one's economy.  Right to Work legislation or any other  one law cannot be solely responsible. However  here  is what my crack research team  learned about right to work states.

In the United States five of the six weakest economies are in states that have right to work legislation and of the 14 most productive states, 12 do NOT have right to work legislation.  In general, those living in  right to work states have lower incomes, higher rates of poverty, have poorer health coverage  and shorter life expectancies.

South Carolina pioneered  right to work  legislation  and its infant mortality rate is currently 15% higher than the national average and work place deaths are 51% above the average.  51%!!!.

 The very opposite of our austerity agenda  seeks to create an economic stimulus not by hoping that corporate profits will trickle down to the little guy but rather  by increasing consumption by  giving directly  to the little guy.

That is done in part  by increasing the minimum wage and social assistance benefits.  Minimum wage earners and those in receipt of benefits are not savers, they are spenders.  If you give  an increase they will spend it  on the necessities of life.  This increase in spending will  create more jobs.  In fact a recent study for the European Economic Union concluded that for every dollar increase in the minimum wage, about 30 cents  goes immediately  back into the economy.  So there is far less dead money

 The creation of the middle class life style that so many of us enjoy is a direct outcome of the trade union movement even for those of us who work in non-unionized workplaces. In states that have right to work legislation and therefore a very weak unionized sector, the middle class is declining at a faster  rate than here in Canada.

The political  consensus seems to be that the solution to having a viable middle class is to cut their taxes even more.  If we cut their taxes , they will be OK.  Nonsense, taxes are not the source of their declining numbers.

Cutting taxes means cutting public services at a time when more people need them. If we really want to improve people`s lives, it is real simple.  They need more money.  They get more money by increasing  government direct investments in the economy and by increasing minimum wage and  subsidy payments to individuals.

I am quite confident that my daughter will not be slicing dill pickles for sandwiches forever.  She will be fine.  In addition to her job she is taking courses and will  take more in the future.

She will be OK, but  my concern is that many others will not unless we rather quickly re-evaluate our economic agenda.

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